Shanghai bank files $20.8M pre-foreclosure in SoHo following borrower bankruptcy

Shanghai Commercial Bank filed a pre-foreclosure action against an affiliate of the Chen family over a $20.85 million loan secured by 250 Lafayette Street in SoHo, nearly two weeks after the Chens placed a stalled $91 million Garment District residential condominium project into bankruptcy to protect it from creditors including Shanghai Commercial Bank.

Case LINK

The Chen family, including Lucia and Ted Chen, has owned 250 Lafayette Street since at least the mid-1990s through the entity Chen Foundation Inc. In 2017 they borrowed $16 million from Shanghai Commercial Bank and in 2020 they borrowed another $4.85 million for a total of $20.85 million, according to city records.

At about the same time, in 2018, the family filed a plan to convert a Garment District building, 335 West 35th Street, into a condominium with 66 residential units and one commercial unit, called the Society House, which has a current sellout price of just under $91 million.  To develop the condos, the family, which owns the property through the entities Neo Image Enterprises LLC and New Tenant LLC, borrowed a total of $60.58 million from Shanghai Commercial Bank and its affiliate Shanghai Commercial and Savings Bank. To secure that financing, the Chens added the Chen Foundation Inc. as a guarantor for the condo development loans, the complaint says.

Court filings represent the position of one party and are not necessarily accurate or complete.

The office building with one residential unit in SoHo has 16,766 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 25 feet and is 126 feet deep with a total lot size of 3,292 square feet. The lot is irregular. The zoning is M1-5/R7D which allows for up to 5 times floor area ratio (FAR) for manufacturing and up to 4.2 times FAR for residential with inclusionary housing. The property is in the SoHo-Cast Iron Historic District Extension. The city-designated market value for the property in 2022 is $6.9 million.

The bank alleges the loans for both properties fell into default, and despite a forbearance agreement that allegedly prohibited a bankruptcy filing, the Chens filed to place 335 West 35th Street into bankruptcy on January 5, 2024, through two related actions, one for each ownership entity.

Bankruptcy filings 24-10015-jpm and 24-10016-jpm. The Real Deal reported that the attorney for the developers says the project is 75 percent complete, but the lender won’t allow the Chens to borrow more money.

In this lawsuit, the bank seeks to foreclose on 250 Lafayette Street, and also recover deficiencies in guarantees.

According to the complaint,”the 250 Lafayette Notes matured on October 31, 2022 and have not been paid in part or in whole by the 250 Lafayette Borrower or any other party. 52. On November 15, 2022, Lenders provided the 250 Lafayette Borrower with notices of default… As of January 11, 2024, the outstanding unpaid balance of the 250 Lafayette Notes will be $20,032,987.89 in principal, plus interest in the amount of $3,125,869.51… Construction has not been completed at 335 West 35th, which was undergoing construction to convert the building into condominiums. Instead, on information and belief, the construction remains approximately two-thirds to three-quarters complete and, as of the date hereof, the general contractor is no longer working at 335 West 35th… As of January 11, 2024, the outstanding unpaid balance of the 335 West 35th Notes is $55,461,314.35 in principal, plus interest in the amount of $9,256,851.14…”

The block

On this tax block, PincusCo has identified the owners of six of the 15 commercial properties representing 166,727 square feet of the 268,509 square feet. The largest owner is Javeri Capital, followed by Jtre Holdings and then Sol Goldman Investments. There are no active new building construction projects on this tax block.

The surrounding

Within a 400-foot radius of 89 Crosby Street, PincusCo identified 11 commercial real estate items of interests occurred over the past 24 months. Of those 11 items, three were sales above $5 million totaling $47.6 million. The most recent of the three was Javeri Capital which bought the 19,578-square-foot, 10-unit rental (D7) on 91 Crosby Street for $29 million from BentallGreenOak on January 12, 2024. Of those 11 items, eight were loans above $5 million totaling $154.5 million. The most recent of the eight was Javeri Capital in which borrowed $20 million from Bank of Montreal secured by the 19,578-square-foot, 10-unit rental (D7) on 91 Crosby Street on January 12, 2024.

Direct link to the property’s ACRIS page and link to DOB NOW portal.